The Week That Was - 10 December 2021

Welcome to The Week That Was, a round-up of key events in the construction sector over the last seven days.

Park v CNH Industrial Capital Europe Ltd – Default judgment set aside on basis of fraud
The Court of Appeal has found that a judge had been wrong to refuse to set aside a default judgment where it was clear that both Mr Park and the Court had been deceived by CNH.

The dispute concerned 2 unregulated hire purchase agreements, entered into by Mr Park, in his capacity as owner of Park Hall Farm, with CNH relating to farm equipment.  Those agreements were supported by personal guarantees that had been executed in the name of Park Hall Farms Limited, a company that did not exist, whose name had been added to the documents by CNH's sales manager.  After terminating 2 hire purchase agreements in 2014, due to non-payment by Mr Park, CNH realised that Park Hall Farms Limited was not the correct party. Its sales manager went to Mr Park's farm at 10pm, climbing over a locked gate, and demanded that Mr Park sign on a Deed of Rectification, substituting him as the guarantor.

Mr Park alleged that the sales manager only gave him the final page to sign and told him that it related only to items in storage. CNH then terminated the other 2 hire agreements and brought a claim against Mr park for payment of all outstanding sums, under the guarantee.  Mr park defended the claim, but he failed to mention the issue if the way the Deed of Rectification had been procured in his Defence, which was subsequently struck out on the basis he had failed to comply with directions concerning the filing of witness statements and the pre-trial checklist. 

At first instance, the judge dismissed Park's application to set aside the default judgment as an abuse of process, on the basis his arguments about the Deed of Rectification were known to Mr Park at the time he filed his Defence and should have been raise then.  The Court of Appeal disagreed.  It concluded that the only reason for preparing the Deed of Rectification was that CNH had realised, after termination, that the company named in the agreements did not exist and the agreements were therefore unenforceable. The case set out in CNH's Particulars of Claim was therefore manifestly false and the judgment should be set aside.

To read the full judgment, click here.

Help to Build prospectus published
The Government has published the Help to Build Prospectus. The scheme operates in a similar way to Help to Buy, but for people who want to self-build or custom build their own home.

The scheme, which was announced in April 2021, is intended to provide an equity loan based on the estimated costs to buy a plot and build the home.
The prospectus sets out that:

• Borrowers must be over 18, have a right to live in England, and have a minimum of a 5% deposit.
• The borrower must also secure a self-build mortgage from a lender that is registered with the Help to Build scheme. 
• The equity loan amount will be between 5% and 20% (up to 40% in London) of the total estimated costs. 
• A maximum of £600,000 can be spent on the new home. This amount must include the cost of buying the land and up to £400,000 on building costs. 
• The borrower has 3 years to buy the land and build the home. Once built they must live in the home themselves. 
• Interest is payable on the equity loan from the 5th anniversary of the loan. 
• The amount to be repaid is based on the market value of the property, not the original amount borrowed.

A copy of the prospectus can be found here.

Built Environment Carbon Database in development by UK professional bodies
The Built Environment Carbon Database (BECD) will collate existing data into a single location, which will be free to access. The aim of the platform is to act as the main UK platform for storing new carbon assessments and to generate project level and product-level benchmarks. Plans for the BECD represent a significant development because of the potential impact such a large scale database may have on industry decision making.

The BECD is structured into two sections:

• Section 1, entry level data
• Section 2, product level data.

Each section will be launched in stages in order that users can provide feedback as the database develops. 

The BECD website can be accessed here.

Arch Insurance (UK) Ltd v Phillip McCullogh  - objective test for the likelihood of a claim reiterated
The importance of notifying circumstances which may give rise to a claim was underlined in this case, relating to a motorbike accident where a child was seriously injured. Despite the Defendant having an honest belief that a claim would not materialise, seemingly on the basis of assurances from the child's parents that they did not hold the Insured responsible, he was still in breach of the notification condition in the policy. As the condition was drafted as a condition precedent, no cover was available as a result of this breach.

The test to be applied is an objective one: on the basis of the Insured's knowledge, would a reasonable man have realised that the risk of a claim was realistic, rather than merely fanciful? This is a realistic worst-case scenario, rather than a hopeful best case scenario. Reliance on a claimant's assurances that they would not hold the Insured responsible would be insufficient, especially when made informally.

A copy of the judgment can be found here (registration may be required for access)

RICS decision -  Charles Wilford and Gerald Eve LLP
In proceedings to seek to reduce the rateable value of Alton Towers, on the basis of lower visitor numbers following the accident on "The Smiler" in 2015, Mr Wilford gave evidence at the appeal as a "witness of fact" and did not disclose that he was acting under a conditional fee arrangement.  The Upper Tribunal found that Mr Wilford's evidence was clearly expert evidence, was critical of his conduct and reported him to RICS.

Initially, the charges brought were for a lack of integrity but admissions of breach in respect of due skill and care were accepted.  Stressing that legal advice did not discharge surveyors' obligations to ensure they complied with their professional duties, both Mr Wilford and Gerald Eve LLP were reprimanded and fined.  Mr Wilford's fine was significantly reduced, to £2,000 in part due to the significant delay of 22 months before this matter was heard.

For the full decision click here.

And finally: The ultimate delay claim - 140 years and counting!
On Wednesday 8 December 2021, the ninth, and second-highest, tower of the Sagrada Familia, which will have 18 towers once completed, was officially inaugurated. The building works on the iconic basilica in Barcelona were started by the great architect Antoni Gaudi in 1883 and there are still nine towers to build. Gaudi worked on the project for four decades and the current lead architect, Jordi Fauli, is the seventh lead architect to have worked on the project, having taken on the role 31 years ago. There are 27 architects and more than a 100 builders working on the project, with no end in sight.

The works were interrupted by the Spanish Civil War in the late 1930s and many of Gaudi’s plans and models were destroyed. The building contract or contracts must also have gone missing because no-one can remember what the agreed LADs were. The basilica may not have achieved practical completion, but there has been sectional completion of sorts – it is now a major tourist attraction, welcoming an estimated 3 million visitors each year, and Unesco has granted World Heritage status to the basilica’s crypt and one of its facades! 

Further information can be found here.
 
Thank you to Emrys Moore, Jonathan Carrington and Charlie Underwood for contributing to this week's edition.